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This may not be the right phrase. It was used with irony years ago by David Halberstam in his book about JFK’s cabinet which, according to Halberstam, was strong on policy and weak on common sense, which led to huge mistakes in Vietnam.

Our point is that for as long as AABD has been around (since 1989), we have emphasized the importance of seeking the best directors for your bank. A strong board is one of the keys to a successful bank.

AABD’s consistent advice has been to find the best candidates without regard to race, ethnicity, gender, or religion. Recent regulatory developments and pressures from activists and certain institutional investment firms have made it more difficult to follow our advice:

  • Nasdaq’s disclosure requirements for listed companies impose what some believe to be de facto quotas for women and minorities. The SEC, which approved the rule, has been sued. The case is now before the Fifth Circuit Court of Appeals.
  • California courts have overturned California’s law imposing quotas for women and certain minorities on boards of companies whose primary office is in the state. California has appealed.
  • The NY Superintendent of Banks has imposed a quasi-like quota system for boards of NY-based banks. We are not aware of any litigation, but AABD and others have communicated concerns.
  • In October 2021, the Acting Comptroller of Currency suggested a quota system for national bank board membership to mirror the percentage of women and minorities in the general population, saying that not having a bank board with sufficient diversity might constitute an unsafe or unsound banking practice. Later, his office clarified that he was not changing policy that prohibits discrimination based on such classifications.

We are sticking to our advice, but you should also check with your counsel.